A Harlem Cultural Hub Is Threatened by Debt

The National Black Theater, a cultural anchor of Harlem, may close because its building is facing foreclosure.Credit
Ozier Muhammad/The New York Times

Theirs was a partnership built on vision and pride and rooted in a building at the very heart of black America.

In 2002 the National Black Theater, a cultural anchor of Harlem, invited the owners of Nubian Heritage, a growing beauty-care company with an African pedigree, to invest in its sprawling building at Fifth Avenue and 125th Street.

The theater, created in the turmoil of the civil rights movement, had owned the building for 19 years. But now it faced foreclosure, as large construction loans remained unpaid.

For the theater, its new partners held the promise of revenue and revival. For the businessmen, two former street vendors from Liberia, the building provided a flagship store in a historic neighborhood.

Nine years later, though, the store is closed; the partnership owes nearly $1.8 million in unpaid property taxes; and the theater is facing foreclosure yet again, a plight it blames on its partners, men it once embraced as kindred spirits and now in court accuses of mismanagement and fraud.

“This debt has placed the theater’s home at risk like nothing else ever has,” said Raymond N. Hannigan, the theater’s lawyer.

Founded in 1968 by Barbara Ann Teer, the theater was created to showcase productions by, and about, black Americans at a time when such stories rarely appeared on the mainstream stage. It has evolved into a cultural spawning ground, one that presents shows and workshops intended to foster respect for African ancestry and for black self-expression, and one graced over the years by artists like Ruby Dee and Ossie Davis, Nina Simone, Nikki Giovanni and Maya Angelou.

But the theater’s story is also a cautionary tale about what can happen when arts groups extend beyond their comfort zone to find revenue, as is increasingly popular in the poorly financed arts world. Ms. Teer was a pathfinder in such efforts. From the day in 1983 when she bought the building, a former jewelry factory, she hoped to finance her work with rent from the other tenants. “The real estate subsidizes the art,” she liked to say.

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Barbara Ann Teer, center foreground, founder of National Black Theater, with the cast of one of her productions in 1970.Credit
Courtesy National Black Theater Archives

The men Ms. Teer later picked to be her lead partners in that effort, Richelieu Dennis and Nyema Tubman, began their careers on 125th Street, peddling organic shea-butter soaps, much like the ones Mr. Dennis’s grandmother once sold at village markets in Africa. Today they operate several companies on Long Island that make skin and hair care products derived from African ingredients, which they market online and through major retailers like Target. Dun & Bradstreet estimated that the primary company has $6 million in annual gross sales.

“My whole life has been about building community, building business in our community, empowering people in our community,” Mr. Dennis said.

But Ms. Teer’s two children, who have run the theater since their mother died nearly three years ago, accuse their partners of leveraging the value of the theater’s building to secure funds for their other businesses and saddling it with debt.

And when the Harlem store closed, the children say their partners ignored the property taxes in an effort to force a sale of the building.

“There are too many things happening at the same time to be a mistake,” said Ms. Teer’s son, Michael Lythcott, a business consultant who said the theater’s very existence was threatened.

Mr. Dennis denied the charges. As the manager of the building, the partnership led by Mr. Dennis and Mr. Tubman was responsible for its business affairs. But Mr. Dennis said he assumed the bank was paying the taxes.

“I’ve never one day tried to do anything that would any way, shape or form jeopardize the theater,” he said.

In 1968, a year when the assassination of the Rev. Dr. Martin Luther King Jr. ignited the tinder that was American race relations, Ms. Teer issued something of a cultural manifesto.

In The New York Times, she wrote of the need to build cultural centers “where we can find out how talented we really are, where we can be what we were born to be, and not what we were brainwashed to be, where we can literally ‘blow our minds’ with blackness.”

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Sade Lythcott, Ms. Teer’s daughter, has operated the theater with her brother, Michael, since their mother died nearly three years ago.Credit
Keith Bedford for The New York Times

Her theater in Harlem was the end product of that effort. At first she carved out space where she could find it: an Elks Lodge on West 127th Street, a loft on East 125th Street where she shared space with the Last Poets.

Harlem Before the Boom

It was a Harlem before gentrification, one where brownstones were often not coveted but abandoned.

The theater was not just a place to see a show but also a forge where Ms. Teer worked to shape cultural identity. Art was supposed to uplift. Tickets were free or inexpensive. Ms. Teer gave up her acting career and until the mid-1980s she wrote for and directed the theater’s repertory company, some of whose productions were broadcast on PBS and staged at national and international halls like Lincoln Center.

“She felt that the arts were a key part of saving the soul of Harlem,” said Geoffrey Canada, the educator whose Harlem Children’s Zone rents space there.

Ms. Teer could afford to buy the 64-000-square-foot building on Fifth Avenue because it had been damaged in a fire. She secured a state loan and other money to convert it partially into a theater, offices and stores. At the 1989 groundbreaking, presided over by Gov. Mario M. Cuomo, she compared her complex to the Tuskegee Institute, the Alabama college that Booker T. Washington helped found.

It was the kind of grand, exuberant statement Ms. Teer was known for, and when she died years later in 2008, at 71, her family and friends gave her a grand, exuberant send-off: a march through Harlem with drummers to a packed funeral at Riverside Church. Her family placed a live elephant, her favorite animal, along the route; fireworks by Grucci burst in the sky that night.

But financial problems were never far away, and they had become critical in 2002, when construction loans from the renovations came due. Mr. Lythcott said the theater expected government loans to settle the debt. When loans did not materialize, the theater began searching for a possible partner.

Mr. Dennis and Mr. Tubman learned of the theater’s predicament from a man who sold jewelry at their Brooklyn store, one of two they had at the time. Both graduates of Babson College in Massachusetts, they had chosen to stay on in the United States when Liberia, their homeland, became engulfed by civil war.

“Mom appreciated their vision and what they wanted to contribute to the community,” Sade Lythcott, Ms. Teer’s daughter, said of the men.

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Barbara Ann Teer at the National Black Theater on Fifth Avenue and 125th Street in 2005.Credit
National Black Theater Archives

Harlem officials also were impressed by the businessmen’s plan: a beauty products store, with a cafe, on the first floor; a spa with a giant hot tub on the second; and a plan to market their products online. The officials provided Nubian Heritage and a related company with $1.4 million in government-financed business development loans.

“They seemed to personify these emerging entrepreneurs, this new generation of entrepreneurs that were moving to Harlem,” said Kenneth J. Knuckles, president of the Upper Manhattan Empowerment Zone, the development corporation that made the loans.

Under the original terms of the partnership, the businessmen agreed to manage the theater building and its half-dozen tenants. They would take two-thirds of any profits. They would pay rent for their own space, and they would pay the mortgage from their assets, not from the building’s operating income. (Mr. Lythcott said the partners agreed to pay the mortgage themselves because they had put up only $800,000 to become partners in a building worth more than $10 million. Mr. Dennis says the amount was $1 million.)

“The possibility of this partnership,” Ms. Teer wrote in a later e-mail to her colleagues, “is designed to shift the consciousness of people all over the world.”

A Partnership Frays

From the start, though, there were problems.

The businessmen rarely paid their own rent and used the other tenants’ rents to pay the mortgage, the theater asserts. There were never any profits to share with the theater. Ms. Teer often complained that her partners were ignoring maintenance and failed to provide her with financial records.

“At least during our five-year foreclosure period, we were clear who the enemy was, therefore we felt in control of our destiny,” she wrote in a 2004 e-mail to Mr. Dennis. “But when dealing with friends, we don’t know where to turn to voice our complaints.”

Mr. Dennis said in an interview that he and his partners had been too quick to sign up to help the theater. They soon found the financial arrangement they had agreed to untenable and the building in worse shape than they had realized, he said. When the renovations took longer than expected, and their store opened late, Mr. Dennis said they had trouble meeting their financial commitments to the partnership.

To upgrade the building, the theater partnership, led by the businessmen, began to take out millions of dollars in loans by refinancing. One of the theater’s largest objections is how this money was spent.

Some of it went to create the elegant spa, which never opened. Today its hot tub sits empty. Other equipment lies unwrapped in its dusty packaging.

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Richelieu Dennis, left, and Nyema Tubman in 2006.Credit
William Neumann

More significantly, Mr. Lythcott charges that other loan proceeds went to pay off the businessmen’s expenses unrelated to the building. He points, for example, to $250,000 disbursed as part of a $6.5 million refinancing of the property in 2006. The closing documents show the money went to help pay off two loans, identified only by their account numbers. Mr. Lythcott said neither loan was connected to the property.

Mr. Dennis’s lawyer, Craig J. Albert, said all the money from the refinancings was spent on the building and that the theater was aware of how it was being spent.

Ms. Teer went along with these refinancings, from which the theater received more than $600,000 over the years. Her son said it was the only way to derive income from the partnership for a theater that costs roughly $470,000 a year to operate and had incurred expenses when it relocated in the building to make room for the spa. Despite the infusions of cash, by 2008 the businessmen had closed their store, abandoned plans for a spa and defaulted on their Empowerment Zone loans. The Empowerment Zone sued them.

At this point, the partners proposed subleasing their empty store to Applebee’s, the chain restaurant. Mr. Dennis said the income would have helped him and his partners meet their commitments. But the theater sued its partners and moved to block the sublease, arguing it had not signed off on it.

Ms. Teer said Applebee’s did not fit with her cultural mission. Her son objected that the deal was structured as a sublease, so the restaurant’s rent would have gone to the partners, not the joint venture as a whole.

Around this time, Mr. Knuckles, the Empowerment Zone president, met with Ms. Teer. She seemed to be feeling stress over her partners, he said. “She was looking for ways to possibly buy them out,” he said, “and we couldn’t entertain any of that. It’s not our business model.”

Today the rest of the lawsuit continues. The Nubian Heritage store space remains empty, its display window broken and patched with plastic.

But the most pressing issue is the tax bill. It first went unpaid in 2007, unbeknownst to the theater. Now, with penalties and assessment increases that the partners have challenged, the bill stands at nearly $1.8 million, which neither party says it can pay.

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Mr. Dennis and Mr. Tubman entered a real-estate partnership with the theater and had plans for the building that included a spa, above, which stands unfinished today.Credit
Ozier Muhammad/The New York Times

Mr. Lythcott said the bank that holds the mortgage, Sovereign, should have been paying the taxes. And he said the theater’s partners had to know the taxes were unpaid because the city sends delinquency notices to property owners. Mr. Dennis said he never saw a delinquency notice. “I don’t know if somebody else got it,” he said.

The bank, which has filed to foreclose on the mortgage — a process that typically takes months to resolve — said it followed its procedures correctly, but did not elaborate.

Ms. Lythcott said her mother never complained more broadly about her partners because, as Ms. Lythcott put it, they were once “Harlem’s darlings,” men whose company Web sites speak of their efforts to foster education in Liberia and youth and community development in New York. Mr. Dennis said it pained him to be viewed as a villain by the theater because the partners did things like employ building staff members who primarily worked for the theater, an assertion Mr. Lythcott denied.

“Everything that I’ve done, throughout all, even to today,” Mr. Dennis said, “has been to support the theater and a lot of times to my own detriment.”

Mr. Lythcott’s response: “It’s just sad that they would take absolutely no personal responsibility.”

If the building is sold — for example, to a commercial venture seeking to redevelop a property in a desirable location — Ms. Teer’s children said it would be difficult to find new space.

Under the partnership agreement, the theater is due 40 percent of any sale proceeds (the partners get the rest), but the building is carrying more than $8 million in debt and back taxes.

And such a sale, the children said, would do little to save their mother’ legacy, which is tied to a particular building on a block she had renamed National Black Theater Way.

“That building and her,” Mr. Lythcott said in a 2008 deposition, “were like the same thing.”

A version of this article appears in print on February 1, 2011, on page A1 of the New York edition with the headline: A Harlem Cultural Hub Is Threatened by Debt. Order Reprints|Today's Paper|Subscribe